Kenya has been described as an economic powerhouse in East Africa. The African Development Bankprojected that economic growth for the country would reach 4.5% in 2013 and 5.2% in 2014.

However, skilled labour is crucial in order to sustain this growth. An article by Africa News Postin July 2013 shed light on Kenya’s literacy rate, based on statistics that subscribe to a broad definition of literacy (the ability to read and write at a specified age).

The publication refered to a Census Bureau ranking of countries in Africa and Kenya, at the time, occupied fourth position, with an overall literacy rate of 85.10%.

However, other websites that offer facts on the country put the figure at approximately 87%.

Kenyan tech entrepreneur Tonee Ndungu is doing his bit to address the need for skills and to help enrich the learning process through the application of mobile technology.

He founded and launched Kytabu and quickly attracted global attention, including coveted support from two US angel investors who saw the appeal of the innovative subscription service and textbook leasing application that relies on mobile money to lease textbooks, as well as an encryption system to protect publisher’s content.

ITNewsAfrica spoke to Tonee about the venture, the technology and what it means for Kenya, as well as Africa.

Please explain how the text book encryption service works?

Textbooks are expensive, and buying in bulk elevates the cost even higher. For a majority of the population in any developing country, the additional challenge of access is always factored in with poor infrastructure making textbook store access nearly impossible within their environs.

Kytabu uses a subscription service that relies on mobile money to lease textbooks and an encryption system to protect the publishers content. The system is simple. Digitized textbooks are stored in a microSD card, which is ‘latched’ to a SIM card with a phone number.

This would mean that the Kytabu application would only recognize the microSD card when the SIM card is inserted into the tablet or dongle as well. The content, now on a tablet or dongle, is distributed as a single product. When an end user buys the tablet or dongle to use on a desktop, they now have access to every (digitized) book in the curriculum.

All they would need to do once they have chosen the book in the Kytabu library on the application is use the mobile money service integrated by the mobile service provider in the SIM card to pay for the amount of time they would like to have the book. This now changes the dynamic of textbook shopping.

Instead of bulk buying, you have fragmented leasing accompanied with on-demand use drastically reducing the cost of the content. A student can rent a page or chapter of a book as well as the whole book (though highly unlikely) for an hour, day, week, month or school term.

What kind of learning material is made available?

Kytabu is targeting the mainstream public education curriculum content because the number of users is the highest in this category, as well as having the highest percentage of those facing immense challenges accessing learning material. Kytabu is offering three categories of content types, which are digital copies of textbooks, audio books of various textbooks and animated material (our own or source from other content creators) on the application.

To secure the content that is owned by various publishers and creator, Kytabu avails all the material in the Kytabu application only. The need for an online portal is appreciated, but a little harder to secure and more expensive with data costs unaccounted for.

With Kytabu, the content is preloaded based on the students class, and upon changing class, the student can get a microSD upgrade once for the year. In the event a book on the microSD needs updating, Kytabu would use the mobile network to update the content remotely at no cost to the students.

Where does Kytabu source material from?

Kytabu is an app much like iTunes is. This means that the content we would offer is not ours and belongs to a third party. We are in the distribution business and earn money on revenue share agreements with the owners of the content. This could be publishers or authors, but they would be responsible for their content, updates and the relevant responsibilities of publishing material for learning.

We would, however, have an oversight advisory team to look over the material for quality and presentation for impact. The Kenyan government bodies responsible for learning content would curate the content.

How did the idea to incorporate this with mobile money transfer technology come about?

The three main problems with textbooks that stood out as we were conceptualizing Kytabu were affordability, accessibility and convenience. The last two were about distance and availability with two main problems centred on the bookshop. With mobile money changing the fabric of society in Kenya, in the most tangible manner because of its convenience, it only made sense to incorporate and integrate it into the buying process.

This not only broadens the buying options, but opens up the paying options from restrictions of distance (anyone from anywhere can lease a book for anyone anywhere) and of purchase (you can pay for a specific piece of content or you can bulk buy bundles for schools).

Mobile money is the payment gateway of the century for Kenya and the most meaningful way to scale the product autonomous of mainstream financial process, which has hampered growth in many other areas.

What kind of operational costs is involved in keeping the business running?

We are still in a startup phase with 7300 students to be integrated into our system by the end of September, from the beginning of April this year. Currently the bulk of our seed investment has been development.

The team has stayed small (three) outsourcing the development and maintaining a very low overhead. We still work out of the equivalent of the founders’ garage. On the long term however, a bigger part of the operational cost will be in the cloud storage and backup of user content and the team administering it.

We are currently in a partnership with Microsoft 4Afrika to use their Azure system. Customer service and troubleshooting will be another cost.

Where does your revenue come from?

The business model would be a revenue share model between the content owners and Kytabu. Currently we have used startup capital from or seed investors and are in our largest fundraising round for $350,000 to begin the rollout. The greatest barrier of which is digitizing the content. In almost all cases, content is in PDF format if digitized at all by publishers.

Did you have access to funding/ financial backing?

Yes, we have been fortunate to resonate with two angel American investors and win a few awards as well. We are currently talking to larger capital investor groups with a hope of getting $350,000 and we are optimistic we will succeed in our endeavor.

What were the main challenges in getting the business off the ground?

Expertise! Most people would lean towards startup capital, but it is the availability of expertise. In our case, this becomes evident when we sorted out local developers for our rapid prototype. The total cost was ten times what it would cost to build it in India. With less money, we could build an even more complex application in another continent. With more expertise, the cost becomes cheaper for startups and innovators and the development of applications will increase helping startups produce more and iterate faster.

Are there any competitors in your market or area of expertise – please expand?

Yes. The competitors in our segment are World Reader and Intel. The difference between is and them is that both are device dependent (a Kindle and a Window OS device respectively) and need the Internet and/or a traditional payment system to access material. They also sell the content in bulk when digital. With this in mind, it is harder for the end user to adopt their system considering the device cost, payment methods and the consistent cost whether on paperback or digitally. This has giving Kytabu a considerable niche and easier entry point with the leaders of the education system in the Kenyan government.

What is your view of eLearning, virtual or distance education – can it address the need for skills, particularly technical skills?

Without a doubt, eLearning, virtual or distance education and interactive learning material are the future of education not just in Kenya, but the developing world as a whole. Just like mobile money keeps leapfrogging traditional banking and finance behaviors and limitations for its 28 million subscribers in Kenya, eLearning can do the same for the more than 15 million students in the country.

Learning through interaction has for decades been the aspiration for educators that have seen a globalization process that has placed their students in competition with students from another part of the world for similar employment opportunities. Expertise can only be accelerated and standardized with personal learning tools that take into account the massive increase in a wealth of information created every second and the specific needs of individual users that promote their learning interaction and experience. And with more children filling classrooms around the continent, a teacher alone is neither sufficient nor capable of handling this responsibility.

What is your view of the startup environment in Kenya, are stakeholders doing all they can to build and nurture startup businesses?

This depends on which sector the startup is in. Agriculture is best placed, mainly because it caters for 80% of the country is directly dependent on it. Education and healthcare closely follow and service industry products including finance and insurance are the last two in the list. Entertainment is a big one because of the speedy uptake and simplicity of user scaling.

But, in essence, there is still much to be said for the stakeholders that are in the industry of nurturing small businesses as well as other stakeholders. Banks and credit offering services have long alienated startups in technology because of the uncertainty of their market, but also because they don’t trust that the public will pick up on the technology as fast as they did with mobile commerce. Such an approach limits the creation and growth of even the best startups. The skill set and ideas are definitely there, but the financial support is lacking or scarce and in very large sums, too big for the average startup to absorb.

How is Silicon Savannah progressing?

The chug is more sustained now with excitement of the last few years being followed by a more mature reliance on facts in the place of hype. Many ‘hot’ ideas and startups fizzled and a good number of lessons have been learnt in ways not to start companies. Bad interactions with VCs and between co-founders have lent to the learning process of present day startups and been useful in building company structures and decision making that would have otherwise been left to chance or undone.

Now we are morphing into a more ‘grown-up’ tech scene, and now I think we will see more globally replicable products with more meaningful impact and financial success.